Top talent being driven abroad due to tax changes

There are concerns that the tax increases that were announced in yesterday’s budget could result in some of the top talent in Britain being driven abroad. This comes after the Chancellor of the Exchequer, Alistair Darling, announced that top earners would face paying the highest tax rates since the 1970s.

Darling announced that around 350,000 people in Britain were earning in excess of £150,000 a year, and these people will be paying the new 50p income tax rate. According to reports when new reductions in allowances and higher national insurance rates come into force part of the income of these high earners will be subject to a tax rate of 61.5%. Also, those earning over £100,000 are likely to lose some if not all of their tax allowance.

The changes are due to come into force earlier than many expected, as they have been scheduled for April 2010. The announcements made by the chancellor in yesterday’s budget were also far grimmer than those that were outlined by the chancellor in his pre-budget report last year. The new 50p tax rate will be amongst the highest in Europe, and some industry experts are warning that this could lead to much of Britain’s talent being driven abroad, which would result in a reduction in the amount of tax collected from higher earners.

One official said that many of Britain’s higher earners would start looking at places such as Switzerland to try and escape this drain on their finances, and that this could mean that people in key industries – people who would play an important role in helping to get Britain out of the ongoing recession – could head off to pastures new, leaving Britain and its extortionate tax rates behind.

Many countries are now experiencing a slowdown in the economy, and in order to boost the economy some are touting for people in certain industries to move abroad in order to help boost the economy. This could look like an increasingly attractive offer for many talented high earners in the face of the new tax announcements from Alistair Darling.